When it comes to taxes, this state really stretches your retirement dollars
As far as taxes are concerned, not all states are created equal for retirees. Some states offer significant benefits, including lower income taxes, no taxes on Social Security benefits and property tax exemptions. These factors can really extend your retirement savings, allowing you to enjoy these years without financial stress. Whether you’re planning to settle down near family or seeking a new adventure in a tax-friendly haven, understanding these implications can significantly impact your financial health during retirement.
New data from Kiplinger has determined the most tax-friendly state for retirees—and the No. 1 place may surprise you. Keep reading to learn which state got the top spot.
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How were the tax-friendly states for retirees determined?
To determine the most tax-friendly state for retirees, Kiplinger evaluated states using two main criteria. It began by narrowing the list to the 13 states that do not tax retirement income. From that group, Kiplinger selected the state with the lowest median property tax payments.
Which state is the most tax-friendly for retirees?
The most tax-friendly state for retirees is Mississippi! The Hospitality State has a number of tax-related perks that help stretch your retirement dollars and make it easier to live out your golden years on firm financial footing.
What makes Mississippi the most tax-friendly state for retirees?
Mississippi is a tax-friendly state for retirees for many reasons that allow older people to retire more comfortably. The most significant tax implications of living in Mississippi are:
Low flat income tax
Mississippi has a low flat income tax rate: Right now it’s sitting at 4.4% for income over $10,000. But this rate is about to get reduced in 2026 to just 4%, making the state even more affordable from a tax perspective.
No estate or inheritance tax
Like other Southern states, Mississippi doesn’t have estate or inheritance taxes, allowing retirees to pass more of their hard-earned assets to their heirs.
Low—or no—property taxes
Compared to the national average, Mississippi has a very low median property tax rate of just $1,189. But some retirees won’t pay any property taxes at all if their property has a value of $75,000 or less and if they meet certain criteria, including: being over age 65 (or disabled), owning and occupying the property as a primary residence and being a resident of Mississippi.
Various tax-exempt income
Mississippi tax code exempts quite a few types of income from being taxed, giving you more bang for your buck. These include Social Security benefits, military retirement pay, distributions from retirement accounts like 401(k)s, 403(b)s and traditional and Roth IRAs, as well as both private and governmental pensions.
Is Mississippi one of the best states for retirement?
From a tax perspective, Mississippi is a great state to retire. But the Hospitality State has other pros—and cons—for people who are settling down in their golden years. Here are some of the other reasons you might want to retire in Mississippi (or might not):
Pros
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Weather: Mississippi is known for having fairly mild winters and hot summers, which is ideal for many retirees.
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Cost of living: Compared to national averages, the cost of daily essentials is typically lower in Mississippi.
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Musical history: Mississippi is known as the “Birthplace of America’s Music” and this heritage runs deep in the culture of the state.
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Slower pace of life: This state is known for its Southern charm and for a more relaxed pace, which can be appealing to retirees.
Cons
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Natural disasters: Mississippi experiences anywhere from 30 to 100 tornadoes a year, and its southern counties are considered part of the Gulf Coast’s hurricane belt.
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Safety: While crime rates are lower than the national average, Mississippi has the highest homicide rate of any state in the country.
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Healthcare: Mississippi consistently ranks low in national rankings that compare healthcare quality outcomes and access.
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Lack of professional sports teams: You won’t find any pros to root for in the Hospitality State.
RELATED:
- New Report: These Are the Best Cities to Retire in the U.S. in 2025
- New Report: This Is the Safest Retirement Town in the U.S.
- New Study: You Can Retire in These U.S. States on Less Than $65,000 a Year
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Sources:
- Kiplinger: “The Most Tax-Friendly State for Retirement in 2025: Here It Is”
- Mississippi State Department of Health: “Tornado Safety”
- USA Facts: “Which states have the highest murder rates?”
- Mississippi State Department of Health: “Health Disparities”
- Visit Mississippi: “Why Mississippi is The Birthplace of America’s Music”
